Ageing, Cognitive Abilities and Retirement

Einaudi Institute for Economic and Finance (EIEF) Working Paper No. 1015

37 Pages Posted: 14 Feb 2012

See all articles by Fabrizio Mazzonna

Fabrizio Mazzonna

University of Lugano - Institute of Microeconomics and Public Economics; Munich Center for the Economics of Ageing (MEA); Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Social Law and Social Policy

Franco Peracchi

University of Rome Tor Vergata - Department of Economics and Finance; University of Rome Tor Vergata - Centre for International Studies on Economic Growth (CEIS); EIEF

Date Written: January 12, 2010

Abstract

We investigate the relationship between ageing, cognitive abilities and retirement using the Survey on Health, Ageing and Retirement in Europe (SHARE), a household panel that offers the possibility of comparing several European countries using nationally representative samples of the population aged 50. The human capital framework suggests that retirement may cause an increase in cognitive decline, since after retirement individuals lose the market incentive to invest in cognitive repair activities. Our empirical results, based on an instrumental variable strategy to deal with the potential endogeneity of retirement, confirm this key prediction. They also indicate that education plays a fundamental role in explaining heterogeneity in the level of cognitive abilities.

Keywords: ageing, cognitive abilities, retirement, education, SHARE

JEL Classification: J14, J24

Suggested Citation

Mazzonna, Fabrizio and Peracchi, Franco, Ageing, Cognitive Abilities and Retirement (January 12, 2010). Einaudi Institute for Economic and Finance (EIEF) Working Paper No. 1015, Available at SSRN: https://ssrn.com/abstract=2004289 or http://dx.doi.org/10.2139/ssrn.2004289

Fabrizio Mazzonna (Contact Author)

University of Lugano - Institute of Microeconomics and Public Economics ( email )

Switzerland
+41 58 666 4787 (Phone)

HOME PAGE: http://www.usi.ch/en/personal-info?id=2299

Munich Center for the Economics of Ageing (MEA) ( email )

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München, 80799
Germany

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Social Law and Social Policy ( email )

Amalienstraße 33
München, 80799
Germany

Franco Peracchi

University of Rome Tor Vergata - Department of Economics and Finance ( email )

Via di Tor Vergata
Rome, Lazio 00133
Italy

University of Rome Tor Vergata - Centre for International Studies on Economic Growth (CEIS) ( email )

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Italy

EIEF ( email )

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Rome, 00187
Italy

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